From Library Journal
Fingleton (Blindside), former editor with the Financial Times and Forbes, bravely challenges the current tendency to be awestruck by the information or postindustrial economy with this solid work on the many strengths of a manufacturing-based economy. His soundly reasoned analysis of key indicators of the security realized from "hard industries," including high-wage job creation, balance-of-trade measures, market share, and long-term growth, contrast with his perception of the "weaknesses" of an information economy, including an unbalanced mix of jobs, slow income growth, and poor export prospects. Fingleton soars beyond today's major media dependence on glib business hype to pose a different economic future for the United States, one balancing the information economy with the solidity of manufacturingAa goal he says can be achieved by boosting the nation's savings, channeling more of these savings into industrial investment, upgrading worker skills, and assuring manufacturer return on investment. An important work; highly recommended for all academic libraries.ADale F. Farris, Groves, TX
Copyright 1999 Reed Business Information, Inc.
Business journalist Fingleton casts a critical eye at the enthusiasm that anoints computer, financial, and other services as worthy wealth-creating successors to the industrial economy. He argues that they will skew the job mix in favor of the highly educated, while the rest tend coffee bars. As bad, in his view, information services cannot export enough to arrest America's relative decline in the world economy. The examples adduced to support this are sharply argued--computer software, for example. It takes intensively trained people to make it, but once made, software can be easily pirated. Further, programming services themselves can be bought abroad; Ireland and India are up-and-coming suppliers. Turning to finance, Fingleton views dimly the sector's claims that their expertise advances the globalized economy. From such skepticism, Fingleton converts to optimism when contemplating manufacturing, specifically that of high-value, high-tech electronics, examples of which he pulls from Japan, his reporting base. For those dubious about the march of laissez-faire, Fingleton provides an info-packed argument with a nationalistic, Buchananite accent. Gilbert Taylor
From Kirkus Reviews
An economic polemic arguing that the information age is an overblown phenomenon. Fingleton, who has written previously about Japans manufacturing culture (Blindside, 1995), this time explores the hidden failure of American nonmanufacturing industries (using Japan as his major foil). Singly and in aggregate, the author discounts the apparent successes of the computer software, finance, and entertainment industries, among others. In comparison, he claims, traditional manufacturing industries, such as automobiles and steel, may have weaknesses, but their potential has been unfairly overlooked. Fingletons main point is simple: manufacturing is an efficient generator of jobs, income, and export wealth. Look at the success of postwar Japan, he invites us, excusing its economic travails of the 1990s as exaggerated by Western powers. Whatever the merits of this argument, they are wounded by Fingletons unrelenting attack on ``postindustrialists,'' modern bogeymen who tout the wonder of the information economy while ignoring the rusting industries of the past. These demons include named sourcesindividual economists, futurists, and publications like the Economist and the Wall Street Journaland amorphous groups such as the media, depicted as dupes and fawning supporters of the postindustrialist mantra. The press, for example, is blamed for portraying manufacturing as a ``consistently dull activity worthy only of self-evident second-raters.'' The author has credible ideas and offers reasonable descriptions of economic activity, yet readers may have difficulty believing someone whose political biases are so flagrantly exhibited. For example, Fingletons complaint that powerful Microsoft and other software companies are guilty of ``exclusionist hiring'' seems merely bizarre when we discover that what he means is, these firms insist on hiring very smart people (``workers of average intelligence need not apply''). At the end, the author reveals his hidden agenda: the need to resurrect tariffs, because ``good fences make good neighbors.'' Fingletons novel promotion of the value of manufacturing is crippled by unbalanced coverage and patronizing insults. -- Copyright ©1999, Kirkus Associates, LP. All rights reserved.
Review
"...In Praise of Hard Industries may shock anyone who feels the machinery of the information economy could not be running smoother...Fingleton does readers service in opening their eyes to more economically grounded solutions than the platitudes and hype of the Internet." -- Business 2.0
"Fingleton argues that the Web is unlikely to prevent the United States from losing ground to its competitors." -- The Industry Standard
"Fingleton argues that the Web is unlikely to prevent the United States from losing ground to its competitors." -- Review
Earlier this month, President Clinton crowed about the nation's steady economic growth over the last eight years. He told Nightly Business Report on PBS that a few consecutive quarters of low unemployment used to lead automatically to inflation. Not anymore, he said: "The laws are being rewritten."Boosters of the so-called New Economy claim to know the new laws. They sometimes say that the United States is succeeding because it's "deindustrializing" – closing down factories and replacing them with a service economy based on information technology. The successes of American high-tech companies and the Web have prompted a string of books from cyber pundits eager to outdo each other in optimism, including Long Boom from authors Peter Schwartz and Peter Leyden (due out in October) and New Rules for the New Economy by Kevin Kelly.
But according to former Forbes and Financial Times editor Eamonn Fingleton, the nation's extraordinary prosperity may be hiding a structural decline. His latest book, In Praise of Hard Industries, purports to offer the real story about the prospects of an information economy.
Fingleton believes the triumphs of U.S. tech companies like Microsoft may end up hurting the country in the long run by making huge information-industry success seem normal. He paints Microsoft as a special case – a company whose growth "has been driven almost entirely by its monopolistic role in setting standards for computer operating systems" while "other software companies enjoy no such all-embracing franchise – and no such license to print money."
The book's basic theme focuses on the difficulties countries fall into when they overemphasize the business of information – in such fields as software, publishing and telecommunications – at the expense of capital-intensive, technically sophisticated manufacturing needed for products like ships, textiles and steel.
Fingleton opens his argument by calling "three strikes against the New Economy." First, he says, the New Economy produces a bad work mix, reserving most jobs for people with high IQs. He quotes a prediction by economic commentator Michael Rothschild that "up to 20 percent of the American workforce will be marginalized by the move to an information-based economy."
Strike two: The New Economy causes slow income growth. This is a surprising claim, but he backs it up by comparing the per-capita income growth experienced by the deindustrializing United States, United Kingdom and Canada with that of heavily industrialized countries like Germany, Japan, South Korea and Switzerland. During the 16 years from 1980 to 1996, the cumulative U.S. income growth rate of 134 percent lagged behind that of 12 other members of the Organization for Economic Cooperation and Development. Britain, which has made an even larger shift toward postindustrialism than America, placed 21st in a field of 26.
Strike three is the fact that language- and culture-dependent information products export poorly, Fingleton says. The money needed to customize software products for other countries goes to translators and consultants in those countries, eating up profits that might otherwise have come back to a software maker's home base.
While digital-age libertarians may have trouble shrugging off the charge that a focus on information leads to slow income growth, they tend to dismiss complaints about job mixes with references to Darwinian struggles for survival. Likewise, they may also question whether exports really matter in a global village.
Fingleton believes that exports do matter, because there is no global village yet. While the "grasshopper-like" U.S. media plays with globalism – an idea that sounds good to Americans, so long as the globe keeps going to see movies made by Hollywood – the "ants" in Japan, Germany, South Korea and Switzerland have built manufacturing and exporting bases that will last long after winter comes to the New Economy. When it comes to improving the export balance, manufactured goods have the edge; Nikon's world-class light-emitting diodes lose little in translation.
What about the Internet? Fingleton argues that the Web is unlikely to prevent the United States from losing ground to its competitors. Many Net enthusiasts are betting that the Web's ability to advertise goods worldwide will enhance U.S. companies' ability to sell worldwide. Probably so, says Fingleton, but not as much as they think.
Most countries have erected trade barriers in order to protect homegrown industries, and those barriers remain important. Countries are no more likely to lower trade barriers because of e-commerce than they were to lower them because of the telephone. Indeed, nearly all the revenues coming to Internet companies in America still come from its 50 states.
Nor does the author expect Web shopping to explode. He quotes Internet commerce expert Mary Cronin as saying that "despite the hullabaloo over e-commerce, customers may not even want it." Fingleton concedes that people don't mind buying books online, but he maintains that for the most part, shoppers still prefer to see and feel merchandise before they buy.
Seen through Fingleton's lens, then, President Clinton is incorrect – the important laws have not been rewritten, merely ignored. Economic success continues to flow to nations with advanced manufacturing bases. And what looks like a sustained boom for information-based economies will in the end turn out to have been a mirage. – Bill Brazell
Other New Titles of Interest
The Channel Advantage by Lawrence G. Friedman and Timothy R. Furey (Butterworth-Heinemann, $30)
As the book explains, "It isn't enough to just add a Web site, hire distributors or build a call center." Companies like Dell and Charles Schwab find the right mix of sales channels. -- From The Industry Standard
About the Author
A former editor for Forbes and the Financial Times, Eamonn Fingleton is an economics commentator who has lived in Tokyo since 1985. His most recent book, Blindside: Why Japan Is Still on Track to Overtake the U.S. by the Year 2000, was praised by John Kenneth Galbraith, James Fallows, and Bill Clinton and was named one of the ten best business books of 1995 by Business Week.
